Return of Federal Student Aid (FSA)/Title IV Funds Regulations
The law specifies how your school must determine the amount of Title IV assistance that you earn if you withdraw from school. The Title IV programs awarded at Drake that are covered by this law are: Federal Pell Grants, Iraq and Afghanistan Service Grants, Direct Loans, Direct PLUS Loans (Graduate Student and Parent), Federal Supplemental Educational Opportunity Grants (FSEOGs), and Federal Perkins Loans. At Drake University, we apply the same guidelines to state and institutional aid. For other programs we use guidelines as provided by their funding source(s).
Though your aid is posted to your account at the start of each period, you earn the funds as you complete the period. If you withdraw during your payment period, the amount of Title IV program assistance that you have earned up to that point is determined by a specific formula. If you received (or your school or parent received on your behalf) less assistance than the amount that you earned, you may be able to receive those additional funds. If you received more assistance than you earned, the excess funds must be returned by the school and/or you.
The amount of assistance that you have earned is determined on a pro rata basis. For example, if you completed 30% of the fall semester, you earn 30% of the assistance you were originally scheduled to receive. Once you have completed more than 60% of the payment period, you earn all the assistance that you were scheduled to receive for that period. The percentage amounts are calculated using the number of allowable days in the semester.
If you did not receive all of the funds that you earned, you may be due a post-withdrawal disbursement. If your post-withdrawal disbursement includes loan funds, your school must get your permission before it can disburse them. You may choose to decline some or all of the loan funds so that you don’t incur additional debt. Your school may automatically use all or a portion of your post-withdrawal disbursement of grant funds for tuition, fees, and room and board charges (as contracted with the school). The school needs your permission to use the post-withdrawal grant disbursement for all other school charges. If you do not give your permission (some schools ask for this when you enroll), you will be offered the funds. However, it may be in your best interest to allow the school to keep the funds to reduce your debt at the school.
If you receive (or your school or parent receive on your behalf) excess FSA program funds that must be returned, your school must return a portion of the excess equal to the lesser of
1. your institutional charges multiplied by the unearned percentage of your funds, or
2. the entire amount of excess funds.
Drake must return this amount even if it didn't keep this amount of your Title IV program funds.
If Drake is not required to return all of the excess funds, you must return the remaining amount. Any loan funds that you must return, you (or your parent for a Direct PLUS Loan) repay in accordance with the terms of the promissory note. That is, you make scheduled payments to the holder of the loan over a period of time.
Any amount of unearned grant funds that you must return is called an overpayment. The maximum amount of a grant overpayment that you must repay is half of the grant funds you received or were scheduled to receive. You do not have to repay a grant overpayment if the original amount of the overpayment is $50 or less. You must make arrangements with your school or the Department of Education to return the unearned grant funds.
The requirements for Title IV program funds when you withdraw are separate from any refund policy that your school may have. Therefore, you may still owe funds to Drake to cover unpaid institutional charges. Drake may also charge you for any Title IV program funds that the school was required to return. If you don’t already know Drake’s refund policy, you can ask the Office of Student Financial Planning for a copy. Drake can also provide you with the requirements and procedures for officially withdrawing from school.
If you have questions about your program funds, you can call Student Financial Planning at 1-800-44-Drake, extension 2905. Information is also available on Student Aid on the Web at www.studentaid.ed.gov.
Modified from Federal Student Aid Handbook (FSA HB, July 2014)